Donors reject Atupele claims on Malawi aid tied to regime change

The World Bank and European Union have exonorated themselves from claims by opposition United Democratic Front (UDF) presidential candidate Atupele Muluzi that donors will only resume budgetary support to Malawi if there will be regime change during May 20 tripartite elections.

But the development partners said the condition to budget support is not on change of government but based on macro-economic stability as assessed by the IMF and the public finance management related assessments of fiduciary.

Baum: “There are no political criteria linked to budget support in Malawi

“Malawi government has implemented a number of actions, but many actions necessary to fix the public finances are still work in progress. Each partner assesses its fiduciary risks and takes decisions on this basis,” EU Head of delegation Alexander Baum is quoted by flagship daily The Nation.

“There are no political criteria linked to budget support in Malawi other than what we call the ‘fundamental principal,’ i.e. Human rights, democracy etc. There is consequently not a link to a specific government and I have doubts that any colleague from the international partners would have said something different. I hope this clarifies it,” he said.

Baum however said did not listen to Atupele’s address.

According to the World Bank Communications Officer Zeria Banda, the officials from the global lender met leaders of UDF and other parties “to share our perspectives on the state of the economy.”

Banda said during the meetings, they discussed how to “sustain economic reforms for more meaningful economic development. “

She said the meeting did not discuss on elections or who would be the leaders beyond May 20, 2014.

Recently, IMF issued a statement saying Malawi has made progress in addressing weaknesses in the public financial management system, which led to about US$20 million being stolen last year.

IMF Mission Chief to Malawi Tsidi Tsikata said that the Fund is happy with the implementation of the Action Plan – a framework containing strong measures aimed at repairing public fiscal systems, recovering stolen assets, and providing accountability.

The corruption scandal, known locally as “cash-gate”, was masterminded by public officers who connived with businessmen and bankers to siphon state funds amounting to about MK6 billion (US$20 million) last year.

The revelations of corruption led the country’s key donors to withhold US$150 millions in budget support and to demand that Banda’s administration investigate and prosecute those involved in stealing state funds.

President Banda responded by calling for a forensic audit backdated to 2005 to help reveal the extent of corruption, and arrested over 60 public officers, who include a former cabinet minister and some business people, and froze over 30 bank accounts.

Although the scandal has weakened Banda’s administration to some extent as she faces elections next month, the London based Economic Intelligence Unit and other local independent observers say that a crackdown on graft, a split opposition, and the benefits of incumbency, will help Banda and her People’s Party to secure another mandate.

Banda, who took office in April 2012, implemented austerity measures that led to a restoration of a $79 million IMF aid programme suspended due to a conflict with her predecessor Bingu wa Mutharika.